Hundreds of jobs in Switzerland, thousands worldwide: Novartis boss specifies reduction plans
Vas Narasimhan for the first time specifies the scope of the planned restructuring. A single-digit number of thousands of jobs will be lost, he announced. The backgrounds.
Vas Narasimhan, head of the pharmaceutical giant Novartis, wants to save around a billion dollars with job cuts.
Photo: Patrick Straub (Keystone)
Novartis boss Vas Narasimhan has given details of the planned job cuts for the first time. Of the 105,000 jobs in the group, “a single-digit number of thousands” are affected by the restructuring program, said Narasimhan in the conference call on the occasion of the quarterly figures. In other words, in the worst case, up to 9,000 jobs will fall victim to the cuts. With his statements, the Novartis boss confirmed a report in this newspaper from mid-April.
Narasimhan did not provide any information on how badly Switzerland would be affected by the cuts. According to information from this newspaper, there will be a few hundred. It is still unclear how the planned job cuts will be divided between the Rotkreuz locations, where sales are located, and the Basel group headquarters. The group currently employs 105,000 people worldwide, around 11,600 of them in Switzerland.
Consolidation costs jobs
The group announced a comprehensive restructuring earlier this month, with which Novartis wants to save at least one billion dollars by 2024. The core is the merger of the previously separate divisions “Innovative Pharmaceutical Products” and “Cancer Drugs”.
The previously separate sales organizations will be merged worldwide. Around 37,000 people currently work in sales at Novartis. In addition, the staff departments such as finance and human resources will be merged.
In addition, Novartis intends to merge its production facilities and back office units into the new Operations unit in order to save costs. According to Narasimhan, the conversion is underway and the first team leaders of the merged units have already been appointed.
After a good start, Narasimhan’s performance is increasingly being judged critically.
In addition, Novartis has also filled the newly created position of Head of Strategy on the Executive Board. Financial analyst Aharon Gal, who previously worked for the fund company Sanford Bernstein, where he is responsible for the biotech and pharmaceutical sector, is to take on this job from August.
Narasimhan’s $1 billion savings plan is trying to boost Novartis’ share price. The American with Indian roots has been head of Novartis for 4 years. After a good start, the performance is being judged increasingly critically. There has been speculation in the media about his replacement for a long time.
Narashim had bought companies for a double-digit billion amount in order to provide the group with promising new technologies such as gene therapies. So far, however, the acquisitions have not had the desired effect.
For example, Novartis bought The Medicines Company, which had a single active ingredient, the cholesterol-lowering drug Leqvio, for almost $10 billion in 2019. This has been approved in the EU since December 2020 and in the USA since the end of last year; Swissmedic granted approval in September. The drug, on which Novartis has high hopes, has not yet achieved any notable sales.
Novartis boss slows down when making acquisitions
Last autumn, Novartis concluded an agreement with the British health service NHS, with the help of which around 300,000 patients at high risk of heart attack are to be treated with Leqvio over the next three years. The program takes time, and Leqvio’s sales figures should accelerate in the second half of the year, said Narasimhan.
In the future, Novartis wants to act more cautiously with acquisitions, the company is only looking at potential takeover candidates that cost a maximum of 2 billion dollars, according to Narasimhan.
The quarterly figures presented by Novartis on Tuesday were in line with expectations. Currency-adjusted sales grew 5 percent to $12.5 billion, and net income increased 11 percent to nearly $3.3 billion.
However, the sale of Roche shares impacted earnings, as Novartis is no longer receiving any dividends from the block of shares.
Holger Alich is deputy head of the economics department. His work focuses on banks and the pharmaceutical industry. Before that, the economist worked as a correspondent from Paris and Zurich for the German Handelsblatt. He learned the journalistic craft at the Cologne School of Journalism.
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